16. Ifbeginning inventory is understated, then: goods available for sale will be

Question

16. Ifbeginning inventory is understated, then: goods available for sale will be overstated. gross profit will be overstated. net income will be understated. stockholders' equity will be correct because the error will have beenreversed. 17. When prepanng a bankreconciliation, deposits in transit are added to the balance per bank statement. subtracted from the balance per bank statement. addedto the balance per companyrecords. subtracted from the balance per company record d. s. 18. CC owns a $600,000 building that waspurchased fouryears ago. The firm was recording depreciatiorn under straight line method, estimating a 20-year service life and a $40,000 residual value. At the beginning ofthis, the 5thyear, CC detemined that the residual value should be $60,000. As aresult ofthis revision, depreciation in the curent yearwould be $24,250 $26,750 $27,000 $30,500 19. Using the income statement approach, an estimate ofuncollectible accounts may be calculated by taking a percentage of: net ncome allowance for doubtful accounts. outstanding accountsreceivabl credit sales. 20·The following data have beentaken from the 19X4 accountingrecords of Kirby Corp Dr r. $450,000 360,000 Total sales for 19X4 Credit sales for 19X4 Accounts receivable, 12/31/X4 Allowance for Doubtful Accounts, $63,000 12/31/X4 3,000 Kirby estimates that 6% ofits accounts receivable will beur collectible. bad debt expense for 19X4? How much should Kirby record as $780 $2,700 $3,780 $6,780 21. On November 1, 19X8. Forte Company received a $12,000, 3-month, 10% note. How much interest revenue should be reported in 19X8 on this note? $100 $200 $300 $1,200 d.

Explanation / Answer

16. Understatement of Opening Stock and Overstatement of Closing Stock will result in Overstatement of Gross profit. Similarly Overstatement of Openiing Stock and Understatement of Closing Stock will result in Understatement of Gross Profit.

Answer:B

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